The most serious energy crisis since the 1970s threatens to slow world economies and promises years of renewed concern over an old problem: the price and availability of energy.
And while the big run-up in world oil prices is taking a toll on the U.S. economy in terms of slower growth and somewhat higher inflation, consumer confidence has not suffered, and neither economists nor government policy-makers see any sign that the bigger oil bill will tip the nation into a recession.
Prices of crude oil to be delivered next month hit a 10-year high of $36 a barrel Friday after the president of the Organization of Petroleum Exporting Countries, Ali Rodriguez of Venezuela, said the price might temporarily reach $40 this winter.
Each of the three previous oil price spikes in the last 30 years triggered a surge in inflation and sooner or later caused the economy to slump. In New York last week, President Clinton raised the possibility that oil prices might trigger a recession somewhere in the world, but he told reporters Friday that is not very likely in the United States.
Asked at the White House whether Americans should be worried about a recession, Clinton replied, "Well, I think in the short to medium term, the answer . . . is no. We have worked very hard over the last 25 years to be a more diverse economy and a less energy-intensive economy in a lot of our production. So we have withstood this oil price fight very much better than we did when it happened before."
Federal Reserve Vice Chairman Roger Ferguson told reporters that so far, the impact of higher oil prices has not spilled over into the prices of non-energy goods and services, though that remains a risk. And it has not had a significant effect on consumer spending, either, he said.
J. Alfred Broaddus, president of the Richmond Federal Reserve Bank, said the recent energy price rise presented a "manageable risk" for the otherwise very healthy U.S. economy.
But Clinton cited the threat of global recession as he urged oil-producing nations to increase production.
Economic growth is slowing in South Korea and India because of higher prices for oil. The economies of European countries, already disrupted by protests about high gasoline prices, are especially vulnerable.
The U.S. economy, with inflation remaining low, does not seem to be suffering the effects of high energy prices. So far, the nation's greater productivity and its reduced reliance on oil and gas compared with the 1970s have offset the energy turmoil.
But the real effect of the higher prices might not have been felt yet. Competition has generally prevented business from raising prices to offset their higher energy costs. But their incomes are being cut, just as every consumer of gasoline, diesel fuel and natural gas has less to save or spend on other goods because of the drain of higher energy prices.
While experts insist oil and natural gas are not in short supply, little is available to spare. Commodities that were in surplus a year ago suddenly have become tight and subject to interruptions.
Indeed, the world's industrial system has so little cushion that the slightest hiccup can cause an extreme reaction.
The buffer of surplus oil production in the world has been cut in half in the last year as prosperity in Asia, Europe and the United States has increased demand for fuel. Cambridge Energy Research Associates estimates that the oil surplus "cushion" is now equivalent to the annual output of Iraq.
Despite its seeming suddenness, the new energy problem has been taking shape for years, analysts point out. Relatively low prices for oil and gas in recent years caused a worldwide downturn in investment for new sources of fuel, said Joseph Stanislaw, president of Cambridge Research.
With little or no new supplies developed since 1998, and demand rising as Asia's economies recovered from recession, today's tight supply situation was inevitable, Stanislaw said.
Clinton can release oil from the Strategic Petroleum Reserve to alleviate temporary oil price pressures on the U.S. economy. He is considering such a move but is waiting to gauge the effect of increased output by the Organization of Petroleum Exporting Countries. "We need to watch the situation closely," Clinton said Friday.
The long U.S. economic boom of the '90s gradually ratcheted up demand for energy, but sluggishness in Europe and stagnation in Japan limited the world's appetite. And Asia's short but intense economic crisis in 1997-98 helped to create a small-scale glut of crude oil.
Today, the picture has changed. Much of Asia is rebounding strongly, and Western Europe is enjoying its strongest economic growth in years.